The Coca-Cola Company is Keeping the Dow Afloat Today, but it Can't Hold Back the Tech Crash

High-priced tech stocks are hurting again today as major indices continue to struggle against the hope of record highs.

Apr 15, 2014 at 12:08PM

American markets are having a very difficult time pushing higher of late. Entering the month of April, the Dow Jones Industrial Average (DJINDICES:^DJI) very nearly broke through to a fresh all-time high, with its April 2 close of 16,573 points a hair's breadth away from the 16,576.66 points reached on the last trading day of 2013. However, the Dow and the broader S&P 500 (SNPINDEX:^GSPC) have spent much of April roaring like a lamb -- both indices have been on a downward trend, with only brief upticks, since the almost-record at the start of the month:

^DJI Chart

^DJI data by YCharts.

Today's performance seems destined to continue that trend. Heading into lunchtime, the Dow and S&P fell from early pops into shallow declines. Both were hovering in the range of a 0.3% loss. However, they are avoiding the fate of the more speculative Nasdaq Composite (NASDAQINDEX: ^IXIC), which continues to suffer a sharp reversal -- it's down 1% this morning -- after providing by far the strongest gains of the three major indices in 2013 and early 2014:

^DJI Chart

^DJI data by YCharts.

No Dow component is suffering any particularly glaring weakness -- none of its 30 components had fallen to a full 1% or greater loss before noon -- but the index's clear standout is Coca-Cola (NYSE:KO), which has by far the best performance on both the Dow and the S&P 500 today with a 3.8% gain.

The world's largest drink purveyor reported its first-quarter financial results this morning, and investors chose to overlook declining top and bottom lines to focus instead on the fact that revenue, which declined 4% year over year to $10.58 billion, was nonetheless better than the $10.55 billion Wall Street analysts had expected. Coke's adjusted earnings of $0.44 per share (generally accepted accounting principles earnings were $0.36 per share) fell in line with analyst expectations. Today's pop seems somewhat inexplicable in light of the fact that Coke's carbonated soft-drink volumes fell 2% last year, and especially considering that both Coke's revenue and EPS have been effectively flat for two years (these metrics have actually been in decline since the start of 2013):

KO Revenue (TTM) Chart

KO Revenue (TTM) data by YCharts.

Unfortunately, Coke's smaller share price -- it's 25th out of the Dow's 30 components in total weighting -- gives it a reduced ability to move the index. However, many of the Dow's triple-digit stocks are trading within a narrow enough band to prevent a steeper decline. About 190 of the S&P's 500 components were in positive territory this morning, but the index's decline is thus far being paced by Facebook (NASDAQ:FB), which is nearly counterweighting Coke's gain with its 2.9% drop. Investors don't seem too confident in the social network's latest effort to become a payments platform, which it should soon roll out now that it has regulatory clearance to set up shop in Ireland, a well-known tech-friendly tax haven. Yesterday's news that Google had scooped Facebook in the acquisition of a drone manufacturer doesn't seem to be well-received by the latter's investors, either, and Google itself has dropped about 1.6% this morning. Are investors starting to fear Big G's transformation into Skynet? If your name is Sarah Connor, you might want to avoid visiting Mountain View for a while.

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The Motley Fool recommends Coca-Cola, Facebook, Google (A shares), and Google (C shares). The Motley Fool owns shares of Coca-Cola, Facebook, Google (A shares), and Google (C shares) and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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